A few weeks ago, on my way to Kyoto, I stopped by the Ryozen Kannon Temple. It’s a memorial for those who lost their lives in the Pacific during World War II. What struck me the most was a corridor lined with 600,000 small Buddhist tablets (ihai) dedicated to the deceased and missing: many people don’t realize that a lot of these tablets are for not for Japanese warriors. They are for Korean soldiers and Allied prisoners who died in Japanese captivity.

As I looked at this sea of wooden tablets, with names I couldn’t read, or recognize, I realized there were no winners or losers in this conflict – only victims. This blog is dedicated to their memory.

The 100-word version

In recent years, leadership experts encourage co-founders and business partners to “embrace conflict” as a way to stimulate dialogue and foster innovation. While this advice is well-intentioned, in practice, it produces the opposite effect. Here is why.

Conflict is a TERRIBLE proxy for healthy partner disagreement.

Conflict undermines the three pillars of your business partnership: safety, trust and purpose. Consequently, communication breaks down, stress levels rise, productivity decreases, and creativity suffers. Left unchecked, this downward spiral takes a toll on your personal health and the health of your business.

Embracing conflict to enhance constructive disagreements with your partner is akin to a “kiss of death” for your business. Growth in partnership requires trust, safety and purpose. For these, you need to end conflict.

The Illusion of Productive Conflict

Whether they are start-up co-founders or seasoned business partners, entrepreneurs team up for three reasons:

1. Since the beginning of time, venturing into the world has been a risky endeavor. Our ancestors found “safety in numbers” to increase their chances of survival. Seeking partnerships in business is hard-wired in our collective genes.
2. Collaboration is defined by our ability to co-create things without harming ourselves or each other. Trust is built over time through our experience of building things together (or at least not destroying them).
3. A partnership is based on the premise that our slice of the pie (financial, emotional or otherwise) is greater than the pie we could create on our own. Aligning our vision, values and purpose with those of our partner, keeps our selfish genes in check and our focus on what truly matters: growing our collective pie.

How can we foster growth in the context of a business partnership? Leadership experts tout the benefits of a healthy disagreement between partners and promote embracing conflict as an effective way to do so. They argue that conflict can boost creativity, bring in different viewpoints, and lead to better decision-making. While it’s true that differing opinions can spark innovation, the situation is more nuanced.

Constructive disagreements between partners are all about difficult conversations that are respectful, focus on real business issues, and are short and to the point. These discussions lead to improved decision-making and growth. Constructive disagreements promote safety, trust and alignment as partners confidently share and explore their different views.

Conflict on the other hand, usually descends into personal attacks that are acrimonious and long-lasting. Conversations come from a place of frustration, anger, and resentment, rather than actual business concern. When partners allow conflict to fester, it creates a toxic work environment, lowers morale, and ultimately threatens the success of their business.

Here is how this plays out.

Step 1: Loss of Psychological Safety

Psychological safety is essential for open communication between business partners. Signs of conflict heighten anxiety. This distorts communication as rational responses to disagreement turn into emotional reactions to stress, commonly referred to as “the 3 F’s”:

1. Fight reaction (amplify the disagreement) – Partners express their differences through personal attacks, trying to score points against each other. This wastes “combative energy” that could have been more constructively directed towards addressing competitive threats to the business.
2. Flight reaction (dodge the disagreement) – Partners reduce their interactions to sidestep difficult conversations. By avoiding communication, they miss out on potential growth opportunities that could be achieved through constructive engagement.
3. Fawn reaction (diminish the disagreement) – Partners tiptoe around sensitive subjects, desperately trying to keep the peace. Appeasement and compromise stifle creativity and prevent honest evaluations of risky business propositions.

In a situation of conflict, partners’ brains shift from “thrive to survive mode.” Their relationship becomes introverted, and they lose sight of the external environment, i.e. their clients, their competitors and even their own team members. No matter what your conflict style, reactive engagement invariably diminishes your ability to respond to threats or opportunities and undermines growth.

Step 2: Erosion of Trust

Trust is the foundation of any successful business partnership. It allows partners to collaborate effectively, share resources, and make collective decisions. However, when partners embrace conflict, trust erodes in two ways:

1. Mistrust the character: When picking a business partner, you’re not just looking at their useful connections and experience or how their skills match yours. On a deeper level, you’re also assessing their character to see if they’ll be a good fit. When conflicts arise, you start questioning their integrity, fairness, and good intentions. You to second-guess your partner’s motives and look for signs that they might be a threat. Since they probably chose you for similar reasons, they might start feeling and acting the same way too.
2. Mistrust the competence: When you choose to partner, you give up some of your independence in exchange for improved collective performance. This is means superior efficiency (optimizing the use of your resources) or effectiveness (achieving your desired outcomes). However, when conflicts arise, partners waste valuable resources – such as time, attention, and skills – on unproductive activities like fighting pointless arguments, avoiding difficult conversations, or appeasing one another. Over time, this waste undermines the efficiency and effectiveness of the business and makes you question why you got into the partnership in the first place.

Trust is the most valuable resource in a business partnership. It is also the most vulnerable when it comes to conflict. Once trust is compromised, it can take a long time to rebuild, and it rarely fully recovers. The lingering effects of trust erosion undermine growth through ongoing tension and dysfunction in the partnership.

Step 3: Decoupling of Purpose

Alignment between business partners is often confused with agreement. Let’s make a clear distinction between the two.

Agreement is about the “How”: the way partners conduct their business, including management style, tactics, priorities, and perspectives. It’s normal and even desirable for partners to have different opinions, as this makes the business more resilient and agile.

Alignment is about the “What”: the identity, values, and especially the purpose. Purpose serves as the partnership’s raison d’être – something that should be established at the outset and regularly reaffirmed. This ongoing validation underpins the sense of safety and trust in the relationship, enabling partners to engage in difficult conversations.

Basically, only when partners are aligned on the “What,” they can work through and actually benefit from their differences in the “How.”

Conflict diverts attention from the business purpose turning it into a personal drama with partners acting as victims, heroes and villains. When disagreements over “How” (the business) pivot from the “What” (the purpose) to the “Who” (the actors), you lose your sense of direction. At that point, embracing conflict truly becomes a kiss of death.

How to end conflict

If you’re struggling with the fallout of conflict with your business partner, do not despair — there’s a clear path to get back on a growth track. It involves three restorative steps:

1. Establish a foundation of safety

• • Create a space where you can where you can talk about what you find difficult in disagreements and share your needs moving forward. In these difficult conversations you reveal your vulnerable side, knowing that it won’t harm you or your partner.
  • Plan regular check-ins to keep the lines of communication open.

2. Recover a level of trust

• • Choose a specific business issue where you and your partner disagree.
  • Brainstorm together to identify a win-win solution rather than a compromise that leaves you both dissatisfied.
  • Write down a casual agreement based on what you come up with.
  • Repeat with other issues.

3. Re-align your sense of purpose

• • Revisit the original purpose of your business venture.
  • Focus on growth.
  • Identify which elements remain relevant today and what has evolved.
  • Draft a mission and vision statement you can recite without needing to check your website.

Conclusion

Embracing conflict between co-founders and business partners may seem like a good strategy for innovation and growth, but it is often a “kiss of death” for the partnership and the business itself. The loss of psychological safety, trust, and alignment of purpose leads to a toxic environment that stifles collaboration and growth. When possible, you need to prevent conflict from escalating and when it does, take swift action to end it. This is easier said than done. It requires commitment and effort and may need the support of a trusted third party to facilitate the process. But it is worth the effort as it pays enormous dividends in terms of your personal health and the health of your business.